CHAPTER ONE
Background to the Study
INTRODUCTION
With the speed of competitiveness and change the business world experiences today, organizations see human resources as priceless and serve as their backbone. The value and massive role played by human resource in organizations particularly those in the financial sector cannot be overstressed. To all intents and purposes, without human resource, there would be no running organization (Argote, McEvily and Reagans 2003). From the point of view of Belcourt and McBey, 2000; Mathis and Jackson, 2010, Çalişkan (2010), human resources are key competencies that distinguish organisations from their rivals, in so doing generating viable competitive advantages ; for that reason, their adequate and efficient management is important. Furthermore, study has disclosed that by managing scarce and useful human resources, organizations boost and maintain competitive benefit (Barney, 1991; Khan, 2010). As a consequence, any organization’s success and achievement hinges on the quality and effectiveness of its human capital.
Andrew Carnegie, a renowned entrepreneur who is acknowledged to have built one of USA’s greatest businesses in the 19th century, highlighted how significant human resources are to the achievement of organizational aspirations and goals. He claims that even if his factories, plants, railroads, ship and money are taken away but his main employees is left, in two or three years he could still have them all again
Organizations may basically be defined as an assembly of people working collectively to accomplish some common goals through a division of labour. Organizations have been
explained by organizational theorists as purposive social entities, created as intentionally planned and organized activity systems, as well as being connected to the external environment (Daft, 2008). A good number of thriving organizations do not owe their accomplishment exclusively to meticulous preparation and carrying out some impeccable action plans and tactics that are flawless but also to the dexterousness of their adroit human resources. Accordingly, it takes the involvement of highly skilled and talented human resources in the organization for the other resources to also be used most advantageously, which in effect add to the constant enhancement of the organization. For this reason, employees are the significant and most dependable resource that is able to put the organization at the forefront of its rivals. Again, Pfeffer (2005) establishes that hiring, development and retention of skilful workers establish the foundation for building up competitive advantage in the market. As such, employee retention plays a fundamental part in the development and growth of establishments.
In Ghana across various sectors of the economy including the savings and loans sub- sector, which is this study’s focal point, the results of retaining employee have also been demonstrated. In their study on employee turnover in Ghana Dwomoh and Korankye (2012) ascribed the soaring level of complaints from customers to the increased rate of staff turnover in the banking sector. This assertion was agreed by Amediku (2008) in a previous research.
As indicated by Cappelli (2000; p.103) “strategic poaching of organizations key workers has turned out to be worthy practice among businesses today. Such situation is similar in Ghana. A Ghanaian Times newspaper article published on 14th September, 2011 announced that a big oil establishment in Dubai was poaching prominent workers from
the Tema Oil Refinery (TOR). This caused a great deal of uneasiness at TOR as a result of the fear that the treatment facility would pay the consequences for the loss of a large number of its gifted work force.
In the Ghana Banking Survey (2014 edition ) carried out by Price Waterhouse Coopers (PWC), bank executives stated that a growing threat to their industry was the brawling of bank executives at the middle level who are trained by top-level banks in existence attracted by comparable remuneration packages and faster progress alongside the path of banking career. In view of the fact that competition in the banking sector and for that matter the savings and loan sub-sector is so intense as well as its fast variations, it is important for any dynamic financial institution to beat competition through staff retention. This because every competitive advantage achieved through the new technology introduction cannot live long if competitors duplicate that technology. Likewise because of the naturally close bond among workers and customers, losing those staffs totally can mean loss of profitable client relationship.
Jurnak (2010) said in page 21, “The average cost of replacing an employee is approximately 150 percent of salary, in other words, it takes about $75,000 to fill up a position that pays $50,000 a year”. These expenses have a serious impact on the income, viability and success of a company.
Samuel and Chipunza, (2009) uncovers that the fundamental expectation for holding workers is to keep proficient staff from leaving an association as this could have unwanted impact on efficiency and benefit. The test of pulling in, holding and motivating individuals, in any case has never been more prominent (Punia and Sharma, 2008). The
issue of strategic staffing turns out to be very important to a lot of establishments, as the capability to retain highly talented essential staff can be key to the continued existence of the organization. Staff retension delivers a wide range of advantages particularly since globalization and the making of provincial financial alliances have expanded work versatility crosswise over nations.
According to Dartey-Baah & Amponsah-Tawiah (2011) no organization stands the chance to continue to exist without the critical role played by employees in that company. Osei-Fosu and Osei-Fosu (2017), concluded in their article “The Sustainability of Microfinance Institutions in Ghana: Causes of Proliferation and Frequent Collapse of Savings and Loan Companies”, 31st July 2017 that high staff turnover is one of the major cause of frequent downfall of Ghanaian savings and loans companies.
For this reason, managers of human capital must embrace the right human resource management practices in order to retain key staff. This is on the grounds that; the knowledge and skills of the workers are needed by the organization to put it in a favourable position. There is therefore the need for a study into the correct human resource management practices that has what it takes to drive down turnover intentions and actual turnover in the savings and loans companies.
